It
is a great pleasure to be here with you today. I'd like
to take this opportunity to bring you up-to-date with
what we are doing at the WTO and to look forward to what
we hope to achieve over the next year.

We
have successfully rebuilt confidence in the WTO, by
purging the bad blood that poisoned relations among
Member governments and demonstrating to the outside world
that the WTO could function effectively and fairly. It
has been a hard slog. But we have made progress on at
least five fronts.

First,
we have launched negotiations on agriculture and
services. Together, these sectors account for over
two-thirds of the world's economic output. The potential
gains to both rich and poor countries from further
liberalization in these areas are huge. They include
cheaper and more bountiful food and clothes, cheaper
telephone calls, better financial services and a faster
spread of the Internet. A study for the Centre for
Economic Policy in London puts the benefit to the world
economy from liberalizing agriculture and manufacturing
alone at over $250 billion, of which over $100 billion
would go to developing countries. The gains from services
liberalization, though hard to quantify, could be even
bigger.

Both
sets of negotiations are going well. Indeed, we have
probably made as much progress this year as we would have
done within the context of a wider round. We cannot,
however, assume that this will continue to be true.

We
have roadmaps for both sets of negotiations. In
agriculture, numerous negotiating proposals have been
submitted from, among others, the Cairns group of
agricultural exporting countries, Canada, the United
States, the European Union, and a group of 11 developing
countries.

The
objective of the service-sector talks is to expand the
service agreement's country and sectoral coverage and
remove restrictions on market access and national
treatment. These negotiations cover some of the key
industries of the future, such as telecoms, computing,
finance and electronic commerce. We have a roadmap for
the first year of negotiations, which will concentrate on
rule-making, especially in the areas of domestic
regulation and safeguards.

The
services negotiations are off to an encouraging,
business-like start, with delegations showing a great
deal of commitment. Indeed, the lack of controversy about
services marks an astonishing contrast with the tortured
years of discussion before the Uruguay Round, when for a
time North-South confrontation threatened to scuttle the
round.

The
fact that services is now an uncontroversial subject is
powerful evidence of the speed with which economic
integration has moved over the past ten years. The WTO's
services agreement, known as GATS, is indeed a powerful
integrating mechanism. No government is obliged to
liberalize, or make commitments, on infrastructural
services like finance and telecoms, but the efficiency
gains for those countries which do so make the cost of
protecting inefficient services very highbecause
the GATS is about investment and technology transfer,
among other things, and market-access commitments are a
powerful attraction for foreign-direct investment. This
is why five small developing countries made unilateral
commitments on telecoms after the end of the basic
telecoms negotiationsthey wanted to attract foreign
investment in the sector.

On
financial services, which always seemed the most
sensitive sector for reasons of sovereignty, prudential
control and so on, we have 106 Members with commitments,
the vast majority of them developing countriesmore
than in any other sector but tourism.

So
far this year, negotiations on market access in specific
sectors have not really started. That will happen next
year, when governments have got their negotiating
objectives in order. But it is clear that there will be a
great deal of interest in the financial sector: industry
in the US, Europe and Japan is already active and there
is great scope for the improvement of existing
commitments, by extending them into additional financial
sectors and by removing or reducing the limitations which
governments now maintain.

In
both the agriculture and services negotiations, the
stakes are high and the interests involved are very
important. Too important for us not to reinforce them and
maximize their chances of success by setting them in an
enlarged negotiating framework that would allow
participants greater scope to pursue benefits across
sectors.

Second,
the WTO has welcomed four new Members this year: Jordan,
Georgia, Albania and Croatia. Oman is set to join on 12
November. A few thousand protesters may demonstrate
against the WTO, but 18 million people have joined the
WTO this year. All of these new accessions represent a
powerful vote of confidence in the multilateral trading
system. Whatever our critics say about us, whatever our
flaws, these accessions underline that governments
believe that freer trade and the rule of law are good for
their citizens. It is a dramatic referendum in support of
rules-based, trade liberalization and the global trading
system. And each new Member brings us ever closer to
being a truly World Trade Organization.

Many
more countries should soon be joining. Chinese Taipei,
Vanuatu and Lithuania, for instance. And, of course,
China.

China'
decision to join the WTO is momentous. It has opted for
reform rather than reaction, openness rather than
isolation.

China
has now concluded bilateral market-access agreements with
all WTO Members that requested one except Mexico. The US
Senate and House of Representatives have both voted
convincingly in favour of permanent normal trade
relations with China. These are big, positive steps. But
China's long march towards WTO membership is not yet
over. There is still a lot of work to do in Geneva to
reach agreement on China's accession protocol, which sets
out the rights and obligations of WTO membership. More
flexibility and a new burst of political energy are
required if China is to join the WTO soon. But it will
eventually happen.

Third,
we have established a mechanism for addressing issues and
concerns  particularly among developing countries
 arising out of the implementation of Uruguay Round
commitments. This is a big achievement. In the run-up to
Seattle, I spent more time on this issue than any other,
including agriculture. It was the source of much of the
rancour that prevented the launch of a new round. Now, we
have a timetable and a framework, and a commitment from
all sides to deal with genuine problems constructively.
This positive disposition was evident at the special
session of the WTO's General Council on 18 October which
dealt with implementation issues.

Fourth,
we have worked through an important package to help the
world's poorest countries reap greater benefits from the
world trading system. This includes offers of better
access to 27 rich-country markets, increased technical
assistance, and closer co-operation between the WTO and
other global institutions that promote development,
notably the World Bank. The so-called Integrated
Framework, a good plan for inter-agency co-operation on
trade-related technical assistance to LDCs, has been
reinvented. We hope it will be in place next year.

Fifth,
we have made progress on involving all our 138 Members in
our work. Thirty do not even have missions in Geneva.
Others have very small missions covering a host of
different international organizations. We recently ran a
second Geneva Week to update non-resident Members on our
work. We have also set up Internet reference centres to
keep our Members better informed of our work, and thus
better able to participate in it. We are also
continuously working to be more open and accountable,
notably through our recently revamped website.

As
a result of all these efforts, the climate in the WTO is
much better than it was a year ago, or indeed at any time
since the 1998 Ministerial. I believe we are now ready to
build on this year's achievements. Our task for the year
ahead is to broaden support for further multilateral
liberalization. The freer-trade coalition is apathetic
and fragmented. We need to mobilise and unite it.

Further
trade liberalization should not be a hard sell. The gains
to the world economy from the Uruguay Round alone come to
over $240 billion a yearnot a bad return on the $75
million that governments annually contribute to the WTO's
budget. Yet with the world economy doing so well, and
America's spectacularly well, the pressure for opening
new markets is not as strong as it was. Moreover, new
technology is to some extent substituting for trade
liberalization in opening new markets. So we need to make
the case for further liberalization again and again.

Unfortunately,
the good times are unlikely to last forever. There is no
convincing reason to believe the business cycle has been
abolished. Further trade negotiations are an insurance
policy against pleas for protection when economies turn
down. If governments are negotiating to liberalize trade,
they are less likely to give in to pressure to slam the
door on imports. It ought not to take a recession to
concentrate minds.

The
longer we delay before launching a new round, the bigger
the risk that the WTO will be undermined and sidelined.
Bruising transatlantic disputes have already put the
system to a severe test. An escalation of such
mudslinging, or an attempt to deal with implementation
issues through a battery of dispute-settlement cases,
would destroy Members' good-will, on which the WTO's
effectiveness depends. A continued absence of
multilateral liberalization would also encourage the big
players to act unilaterally and to carve up markets
through preferential trade agreements. The rule of law
could gradually give way to the law of the jungle.

To
be sure, there are risks in rushing into a new round.
Another failed launch would be disastrous. If a new round
is to be started, governments need to show more
flexibility and find the political will to confront
entrenched special interests for the greater good.
Governments big and small must move beyond their Seattle
positions. As you know, Seattle failed not because of the
process or protests but because the differences,
transatlantic and North and South, were too deep, too
entrenched to overcome.

Important
differences remain among national positions, particularly
on the subjects to be included in the future
negotiations. These differences will have to be bridged
if we are to move the trading system forward on a broad
and balanced liberalising agenda as we all want. The work
that my colleagues and I in the Secretariat have done in
this past year has, I believe, improved the climate in
which these issues are addressed. We have worked
systematically to encourage dialogue and understanding at
all levels, from government Ministers to technical
experts. We will continue and intensify these efforts.

All
of the existing  very substantial  work
programme of the WTO must be carried forward
energetically so that it contributes not only to building
confidence but also momentum. I will do everything I can
to ensure the preparation is done and conditions are
favourable for the political decisions needed to launch a
broader negotiating agenda. However, only WTO member
governments can take those decisions. No one can decide
for them.

Reaching
a consensus to extend the negotiating agenda will call
for flexibility and a willingness to compromise on all
sides, frankly, more than we have seen so far. It will
call for realism, for difficult choices among priorities,
and for political courage. No one can expect to achieve
one hundred per cent of their stated objectives. But all
participants share an interest in success and difficult
though the process of building consensus may be, it is
the only way to agree on a new round to which all WTO
members can actively commit themselves. You can be sure I
will do everything I possibly can to facilitate members'
efforts to reach such a consensus.

I
urge all WTO member governments to build on the progress
of the past year, to work together concretely and
pragmatically, but never loosing sight of the truth that
this must be a dynamic evolving system which works for
all its members and their peoples.